MAS announces AI utility NovA! to unlock opportunities for green financing and combat greenwashing

28 July 2022

On 21 June 2022, the Monetary Authority of Singapore (“MAS”) issued a press release announcing the first use case of NovA! to help financial institutions (“FIs”) assess the sustainability performance of Singapore’s real estate sector. NovA! is part of the National Artificial Intelligence Programme in Finance and is aimed at helping FIs harness artificial intelligence (“AI”) to generate insights on financial risk. In the initial phase, the programme will focus on enhancing FIs’ ability to assess companies’ environmental impact and identify emerging environmental risks.

FIs will be able to tap on NovA! for their environmental, social, governance (“ESG”) risk assessment for originating, underwriting, and servicing of sustainability linked loans as follows:

  • Loan origination: At loan origination, FIs can use NovA! to identify real estate corporate borrowers whose sustainability metrics can be improved, by comparing their historical environmental performance to that of their peers;
  • Underwriting: During underwriting, NovA! will assist FIs to set appropriate sustainability performance targets (“SPTs”) for the borrowers, by comparing borrowers’ SPTs with the SPT Industry Benchmark generated by NovA!; and
  • Servicing of loans: For servicing of loans, NovA! will compare the actual sustainability performance indicators (through direct use of meters or sensors) against the borrower’s self-declaration to detect greenwashing.

The NovA! ESG use case will also reduce the amount of time it takes for FIs to collect, process, and analyse data through the use of natural language processing technique to automatically extract relevant information from documents. This will reduce the overall cost of operations for FIs.

To support FIs’ sustainability journeys, NovA!’s ESG use case will be integrated with MAS’ Project Greenprint. Datasets collected via Greenprint will be used to supplement NovA!’s insights-generation capabilities, which will be accessible to Greenprint partners via application programming interfaces.

The press release states a demo version of NovA!’s ESG use case will be released during the Singapore FinTech Festival 2022 in November. In early 2023, a beta version will be released for testing by FIs, followed by further fine-tuning for eventual industry adoption of the solution. A white paper documenting the product design and AI features will be published in mid-2023.